JOHANNESBURG (miningweekly.com) – The first six months of 2013 had been a turnaround period for London-listed Beacon Hill Resources, with various key milestones, that would ensure that its flagship Minas Moatize project became a tier-one asset, having been reached, CEO Rowan Karstel said on Thursday.

“We continue to advance Minas Moatize as evidenced by the inaugural production of coking and thermal coal following the completion of the first phase of our wash plant upgrade,” he said.

He added that while the spot price of coking coal was lower than that of previous years, producers such as Beacon Hill remained well-positioned to build value, particularly with the high quality of its products and the ongoing progress that was being made in executing the company’s cost-effective logistics solution.

“This differentiates us from many of our peers and with the associated rail infrastructure developing well, we look forward to completing the commissioning of the wash plant and moving into full production over the coming months,” Karstel said.

Beacon Hill reported that the 300% increase in the capacity of its Minas Moatize coal wash plant to 1.8-million tons a year had been completed, with the fist low-volatile premium hard coking coal and export quality thermal coal having been produced.

The plant commissioning was progressing well with potential challenges having been identified and rectified, the company said.

Meanwhile, Minas Moatize’s Joint Ore Reserves Committee-compliant resource saw a 31% increase in the six months, bringing the measured and indicated resource to 86.8-million tons.

Further, during the half year, the coal miner was granted a 7.7% capacity allocation on the Sena rail line, which was initially equivalent to 500 000 t/y but was expected to rise to 1.5-million tons a year following the rail line’s expansion.

The company added that its rail infrastructure development was progressing well with the first Minas Moatize trains expected to depart for the Port of Beira in the fourth quarter of this year.

Beacon Hill had also signed a mining contract with the government of Mozambique to enhance the stability of the fiscal and regulatory environment for a period of 25 years.

“The first half of 2013 has been one of the best periods for the development of the Minas Moatize project since its acquisition by the company in 2010,” Beacon Hill chairperson Justin Farr-Jones commented.

He added that the board expected the difficult coal market conditions experienced during the first half of this year to persist for the remainder of the year.  “Nonetheless, we have a clear and focused plan to establish profitability by increasing our scale and operational efficiency.” 

Once the Minas Moatize Phase 2B upgrade was completed, pushing capacity to 2.8-million tons a year, the project would transition from a tier-two to a tier-one cash cost producer, capable of generating profits even at the current depressed prices, he added.

“In addition, the Minas Moatize coking coal project scores well in every objective criteria for a globally significant coking coal asset. For this reason, the board is of the opinion that the current value of the company is substantially undervalued and that shareholders will eventually be rewarded with a rerating as our profile and presence in the seaborne coking coal market grows,” Farr-Jones said. 

The company on Monday reported revenues of $1.12-million for the six months ended June 30, compared with revenues of $388 000 for the previous corresponding period; however, the company suffered a loss of $7.64-million for the period – an improvement on 2012’s $8.81-million loss.